Summary
Citigroup begins the Q1 semiconductor earnings period with a guarded sector outlook but has singled out two stocks as potential upside plays: Advanced Micro Devices and Analog Devices. The bank left several large-cap names unchanged as core recommendations while flagging data-center strength and analog pricing as the most persuasive near-term themes, and identifying smartphone-chip suppliers as the riskiest group due to memory cost pressure.
Big-picture stance and top picks
Citi retained Broadcom, Nvidia, Texas Instruments and Monolithic Power Systems as its overall top picks heading into the quarter. At the same time, analysts at the firm anticipate a mixed earnings season across semiconductors, with a clear preference for companies exposed to data-center AI and general-purpose server demand, followed by analog semiconductor suppliers operating with lower inventories and compressed margins.
The bank is most cautious about smartphone chip suppliers, citing expectations that rising memory costs will weigh on demand for lower-end units.
Advanced Micro Devices - neutral rating, upside potential
Citi left its rating on Advanced Micro Devices at Neutral but lowered the price target to $248 from $260. The firm moved to a sum-of-the-parts valuation that separates AMD’s CPU and GPU businesses in its analysis. Analysts led by Atif Malik nudged their 2026 EPS estimate up modestly to $6.38 from $6.34, attributing the change to stronger CPU sales tied to agentic AI demand.
The team at Citi sees scope for upside relative to consensus ahead of AMD’s results, noting that "Intel and AMD each told customers they intend to raise prices across their CPU product lines, with increases starting in March and April." Citi also cited continued server CPU share gains for AMD, which reached a 41.3% revenue share in the fourth quarter of 2025, up from 39% the prior quarter. By contrast, Intel’s share has fallen to 58.7% from 89.2% in early 2021. Citi’s analysts added that while AMD expects the back half of 2026 to be subseasonal, the company remains confident its Client business can grow through share gains and a focus on premium segments.
Analog Devices - buy rating on pricing tailwind
Analog Devices is on Citi’s catalyst watch for the quarter, where the bank maintains a Buy rating and a $400 price target. Citi’s interest is driven by expected price increases in analog components. Supply-chain discussions at a recent industry conference showed both Texas Instruments and Analog Devices raising analog prices by 10-15% in response to higher input costs, and Citi’s April and July quarter estimates for Analog Devices already sit above Street consensus.
Data center demand and sector modelling
Citi highlights the data-center segment as the strongest end market, accounting for 34% of semiconductor demand and underpinned by AI infrastructure spending. The bank models capital expenditure by the five largest U.S. cloud providers growing 69% in 2026 after a 79% increase in 2025, and projects the total data-center semiconductor addressable market to reach $731 billion by 2028.
Bottom line
Overall, Citi expects a mixed Q1 for semiconductors with the clearest opportunities concentrated in data-center chipmakers and select analog suppliers, while advising caution around smartphone-focused names that may be vulnerable to memory-cost-driven demand declines. AMD and Analog Devices are the two names Citi expects could surprise to the upside, each for different reasons tied to pricing and share dynamics.